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Canada Offers a Low-Cost Alternative

Our neighbor to the north offers U.S. manufacturers a highly trained work force at bargain prices.

  [ 3/28/1997 ]  By: Louise A. Legault   Print This Article  Reprint/License This Article  E-mail This Article To A Friend  
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From coast to coast, Canada has made enormous inroads in key sectors of the new economy. In knowledge-based sectors, Canada's manpower is proving to be one of its greatest assets.

Study after study reveals the many advantages of this great country, forcing investors to
take a second look.

A comparison of business costs in Canada and the United States by KPMG found that,
on average, location-sensitive costs were 15.7 percent lower in Canada than in the U.S.
Labor costs weighed heavily in this equation, with Canada's health care system and the Canada/Quebec Pension Plan resulting in lower benefits paid by employers. There is more, however.

The "World Competitiveness Report" gave top marks to Canada for its transport and telecommunications infrastructure. A Colliers Macaulay Nicolls International survey of selected cities worldwide indicated that the average cost of office space in eight Canadian cities ranged between $8 and $26 per square foot. Natural gas and electricity prices were the lowest of the G-7. Add to this a 1994 Conference Board study which concluded that, of all industrialized nations, Canada offered the best fiscal measures to encourage R&D activities, and you begin to understand why Canada is faring so well in information technologies, telecommunications and pharmaceuticals.

As for quality of life, Canada is hard to beat: the country is first on the United Nations'
Human Development Index and five Canadian cities -- Vancouver, Toronto, Ottawa, Montreal and Calgary -- figure among the first 13 cities worldwide for quality of life, according to the Corporate Resources Group of Geneva.

Our whirlwind tour of Canada shows just how much Canada has changed in recent years.

Central Canada: Driving the Canadian Economy
The province of Ontario leads manufacturing in Canada, culling 53 percent of manufacturing shipments in 1995. Ontario accounts for 15 percent of the North American vehicle production; investments announced since 1991 in this industry alone total Canadian dollars ($CAN) six billion.

The plastics industry is also heavily concentrated in Ontario, as are the chemical and food and beverage sectors. Other key sectors of the Ontario economy are information technology, machinery and equipment, aerospace, steel, forest products and minerals.

The provincial capital, Toronto, has attracted worldwide attention. Fortune magazine has
rated Toronto 8th best business city in the world. It also ranks among the top five head office locations in the world, according to a PHH Fantus survey.

Toronto is a major financial center, home to over 80 percent of Canada's foreign bank head offices, and garners over 80 percent of Canada's leading advertising, accounting, consulting and legal firms, as well as of 80 percent of Canada's top high tech firms.

Immediately west of Toronto, the city of Mississauga has vastly benefited from its high powered neighbor.

"In Mississauga, we are just minutes away from the airport [Pearson International Airport]," said Robert Gordon, president of Oracle Corp. Canada Inc. "As well, the tax savings, the excellent highway connections and the quality of the work force make this the best place to do business in the Toronto area."

Ottawa, the nation's capital, is also a major R&D telecommunications center. Its $8 billion
per year advanced technology industry flaunts names such as Nortel, Corel, Mitel, SHL Systemhouse, Newbridge and Digital Equipment.

Quebec: High Tech at Low Cost
Quebec, Ontario's neighbor to the east, is fast becoming a prominent location in high technology circles.

In a 1995 Price Waterhouse survey of 23 North American cities, Montreal came out on top as having the highest density of high tech jobs per capita. A competitive fiscal policy, generous R&D tax incentives, a skilled labor force and the added advantage of operating in Canadian dollars all translate into lower operating costs for investors. The province further rewards innovative companies with low taxes on profit and advantageous depreciation rates. As a
result aerospace, pharmaceutical, biotechnology, telecommunications and information technology all feature prominently.

In the pharmaceutical sector alone, investments of $CAN 2 billion have been announced for Montreal over the 1988-2004 period.

"There is so much going on here in the field that we manage to lure Quebec research scientists back from Harvard and the U.S. National Institute of Health." said Paul G. Howes, president of Merck Frosst Canada.

The Chairman of Wyeth-Ayerst Canada, Aldo R. Baumgartner, says it best, however:
"I have worked all over the world, and Montréal is one of the best places in the world for quality of life."

Eastern Canada: Cost Advantages
The drive towards a value-added economy is nowhere more evident than in the Maritime provinces.

Forestry and mining align with information technologies in New Brunswick, where some
40 companies have established call centers since 1991. New Brunswick has gone one step further, with remote application management centers such as that of SHL Systemhouse; it is now moving into advanced training technology, having embarked on the information highway as early as 1994.

In Nova Scotia, information technologies, aerospace and defense (with major names such
as IMP Group, Litton Systems and Pratt & Whitney), pharmaceutical and the film industry have all successfully joined traditional sectors such as fishing, agriculture, mining, steel and forestry.

The Nova Scotian capital, Halifax, with its deep water, ice-free port facilities and 24 hour international airport, is off to a brand new start of sorts, with the creation of Greater Halifax (pop. 330,700), Canada's tenth largest city. The $CAN 300 million Bayer/Red Cross Plasma Fractionation Plant will serve as a catalyst for the creation of the Nova Scotia Science Park.

Increasingly, information technology firms such as Keane Inc. of Boston and SHL Systemhouse are impressed by the availability of trained professional help in the area and the unbeatable quality of life afforded by Halifax.

Prince Edward Island is also poised for renewed growth, with the inauguration, this coming June 1st, of Confederation Bridge, linking it to New Brunswick 12.9 kilometers away.

Firmly entrenched in farming, fishing, tourism and the food processing industry -- with household names like McCain and Cavendish Farms -- PEI has forayed with success into the call center business.

Sumerside Aerospace Centre, a tax free zone for companies in aviation and aerospace created on a closed Canadian Forces Base, has attracted among others Testori Americas Corp., which finds it can service both the North American and European aerospace market from the Island.

Western Canada: Diversification Pays Off
Wheat fields and oil rigs have long been associated with the Canadian Prairies. That perfect photo needs a little retouching these days. Alberta, for one, has capitalized on its resource base to attract major investments in petrochemicals, forest products and food processing.

Saskatoon's Innovation Place, a research and development park adjacent to the University of Saskatchewan, concentrates on 30 percent of the Canadian agricultural biotechnology industry.

The city of Winnipeg, Manitoba, is banking on its location in the Central Time Zone, the low cost of land, rental space, utilities and wages and its multilingual work force to attract new business to the fork of the Red and Assiniboine rivers. Targeted sectors are health care, pharmaceuticals, information technologies (there are some 85 call centers in Manitoba) and aerospace (Winnipeg is home to Boeing, Bristol Aerospace, Lockheed Martin, Hugues Aircraft and Standard Aero).

Winnipeg also boasts strong advantages as a regional distribution center through its 24 hour international airport, its rail and road network, its ready access to the ports of Churchill and Thunder Bay. Winnipeg is also involved in the Red River Trade Corridor and the Mid-Continent Trade Corridor.

On the edge
Closer to California and the Orient than it is to the rest of the country, Vancouver, British Columbia, has branched off from B.C's resource industries and ventured into tourism, communications, finance, film production (Vancouver is the third largest production center in North America, after Hollywood and New York), high tech and services.

East, west, and everywhere in between, Canada, as witnessed by ever increasing exports, is successfully positioning itself as a gateway to the Americas, the Pacific Rim and the European Community and forging a very promising future indeed.

Louise Legault is a Montreal-based
freelance writer.

To find out more:

Alberta -- http://www.gov.ab.ca/dept/edt.html

Canada -- http://www.dfait-maeci.gc.ca

Mississauga, Ontario -- http://www.city.mississauga.on.ca

Montreal, Quebec -- http://www.cum.qc.ca/investmontreal

New Brunswick -- http://www.csi.nb.ca/econ-dev

Nova Scotia -- http://www.gov.ns.ca/ecor/

Ontario -- http://www.ontario-canada.com

Ottawa, Ontario -- http://www.rmoc.on.ca/ocedco/ocmain.htm

PEI -- http://www.gov.pe.ca/

Quebec -- http://micst.gouv.qc.ca/invest-quebec

Saskatchewan -- http://www.gov.sk.ca/econdev

Saskatoon, Saskatchewan -- http://www.innovplace.saskatoon.sk.ca

Winnipeg, Manitoba -- http://www.wpgecocondevp.org


 

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